SSC MTS EXAM

Detailed explanation-1: -Interdependence. Under Oligopoly, since a few firms hold a significant share in the total output of the industry, each firm is affected by the price and output decisions of rival firms. Therefore, there is a lot of interdependence among firms in an oligopoly.

Detailed explanation-2: -In an oligopoly market, there is a small number of big firms. Accordingly, there is a high degree of mutual interdependence, implying that price and output policy of one firm has a significant impact on the price and output policy of the rival firms in the market.

Detailed explanation-3: -Oligopoly characteristics The most important characteristics of oligopoly are interdependence, product differentiation, high barriers to entry, uncertainty, and price setters. As there are a few firms that have a relatively large portion of the market share, one firm’s action impacts other firms.

Detailed explanation-4: -Collusive. The collusive price leadership model may emerge within markets that have oligopolistic conditions. Collusive price leadership occurs as a result of an explicit or implicit agreement among a handful of dominant firms to keep their prices in mutual alignment.